Changes to White Collar Duties Overtime Pay Test?

Changes Coming to White Collar Duties Overtime Pay Test?

The U.S. Department of Labor issued a Notice of Proposed Rulemaking (NPRM) on July 6, 2015 that seeks to gather comments on possible changes to its current Fair Labor Standards Act (FLSA) regulations. Particularly, the NPRM seeks to update the regulations governing the application of the so-called “white collar” exemption for employees who meet a particular salary threshold and perform executive, administrative, and professional duties. While the NPRM makes specific proposals regarding the salary threshold — raising it from $455 to $921 per week — it leaves open for comment the question of revising the duties component of the exemption.

The Current White Collar Duties Test

In order to be exempt from the minimum wage and overtime requirements of FLSA as currently written in DOL regulations, executive, administrative, and professional employees must satisfy a duties test (in addition to meeting salary thresholds not discussed here). An exempt executive employee must customarily and regularly direct the work of at least two employees and have the authority to hire or fire, or be able to make recommendations that are given weight with regard to the hiring, firing, or other change of status of other employees. As to administrative employees, they must have a primary duty of performance of office or non-manual work directly related to management or general business operations of the employer or the employer’s customers and include the exercise of discretion and independent judgment with respect to matters of significance. Finally, for professional employees, they must have primary duties requiring advanced knowledge in a field of science or learning normally acquired by prolonged intellectual study, or work that is original and creative in a recognized field of artistic endeavor, or teaching in a school or educational institution, or work as a computer systems analyst or programmer.

DOL’s Concerns with Duties Test in the NPRM

DOL indicated concerns with the current duties test for the white collar exemption in the NPRM. Particularly, it expressed concern that employees in lower-level management positions may be classified as exempt and thus ineligible for overtime pay even though they are spending a significant amount of work time performing nonexempt duties. A disproportionate amount of time spent on nonexempt duties may call into question whether an employee is in fact exempt as an executive, administrative, or professional employee. Even though exempt and nonexempt duties may be performed concurrently, this can be difficult to apply and lead to varying results.  Notably, DOL pointed out that California has addressed this issue by requiring that exempt white collar employees spend at least 50 percent of their time performing their primary duty, and non counting time during which nonexempt work is performed concurrently. DOL posed the question in the NPRM whether it should look to the California rule as a model. Additionally, DOL asks in the NPRM whether the concurrent duties rule needs to be modified and whether there should be a limitation on the amount of nonexempt work.

DOL may or may not modify the white collar duties test when it issues its final FLSA rules. Until then, the current duties test remains in effect. If you or someone you know is not being paid overtime as required by FLSA regulations because of misclassification as an exempt executive, administrative, or professional employee, you should call (855) 754-2795 or complete the Free Unpaid Overtime Case Review form on the top right of this page. Our top rated team of wage lawyers will evaluate your situation to determine your best course of action. We will also determine if it is in your best interest to file a lawsuit against your employer. There are strict time limitations for filing, so it is important that you call our experienced attorneys today.

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